Dear Mr President, ladies and gentlemen, dear guests, it is
a great honour for me to have been invited to speak to the Council
of Europe today. It is a great personal pleasure for me too, because,
as you mentioned, Mr President, I was a member of the Parliamentary
Assembly of the Council of Europe for three years, and that period
was perhaps one of the most interesting and important in my life,
and also, of course, played an important role in my future activities
and in my holding the position that I hold today.

Azerbaijan became a member of the Council of Europe only three
years ago. Before that, the country suffered from a lot of problems.
After Azerbaijan became independent in 1991, the situation there
was very difficult. There was total chaos – political, economic
and military. Economic decline was significant, and in practice
the country was on the verge of collapse. There was civil war, and
several attempted military coups d’état – and, of course, Armenian
aggression against Azerbaijan. Those factors did not allow the country
to develop normally in a free democratic way.

Only after the difficult heritage of the past was overcome,
only after social and political stability was established in Azerbaijan
and a cease-fire was achieved between Armenia and Azerbaijan, did
the country have a chance to start developing in a diversified way.
Our economy started to grow and today, from the point of view of economic
development, Azerbaijan is a rapidly-developing country. Over the
last seven years, growth in gross domestic product has been 90%.
During the same period, the inflation rate has not exceeded between
2% and 3%. Azerbaijan is one of the leading countries among former
Soviet republics and some eastern European countries in respect
of direct foreign investment per capita. All those factors, plus
large-scale economic reforms, land reform, land privatisation and
the general privatisation of enterprises, allow the country to build its
economy on the basis of a market economy.

Today, the private sector share of GDP is 75%. That is a high
figure, but we must take the oil factor into account. The oil sector,
which has a large stake in GDP, is still a state monopoly, so that
the figure 75% shows that almost all of our industry has already
been privatised.

Our country is developing: the economy is growing and that
allows us to implement huge international economic projects. Today,
the world’s biggest energy project is being implemented in Azerbaijan.
For ten years, Azerbaijan has been developing its oil and gas resources,
with leading world companies. That experience has been very successful
and there are several key elements to that success.

The investment climate is very good. Our investors can be
completely sure that their investments are properly protected. All
major investment projects in Azerbaijan are ratified by our parliament
and become law – so no one can change them.

We have transparency, which in the oil and gas sectors and
the principal extractive industries is a key element of success.
In that respect, Azerbaijan has made significant achievements. We
joined at its very beginning the extractive industries, transparency
initiative, and we are ready to lead that process in the region.
We have close communication and co-operation with international
financial institutions, especially the International Monetary Fund,
with which we co-ordinate all our major economic activity. All those
factors allow us to attract billions of dollars in investment. Last
year, the total amount of investment in Azerbaijan was US$17 billion,
US$12 billion of which was direct foreign investment. If investors
were not confident of social and political stability, predictability
and development in the country, they would of course not risk their
capital. We are very determined to continue that policy.

Within the next three years almost US$10 billion will be invested
in the oil and gas sectors alone. Huge communication and pipeline
projects being built today are important not only for our country
and the territories of the countries through which the pipelines
pass, but for the whole region. They are important for regional security,
stability and co-operation.

Azerbaijan is very active with respect to issues of regional
co-operation, and today the level of regional co-operation is satisfactory
and we are ready to play an important role in that regard in the
future.

Properly used, Azerbaijan’s oil and gas reserves in the Caspian
Sea will allow our country, to diversify our economy. The production
and transportation of oil and gas is not the final goal but a means
to diversify the economy, to create a modern, civilised, economically
strong society, to conduct further political reforms and to continue
on the path of the democratisation of our society.

Those achievements and the projects that will be implemented
in the near future will of course very much help to strengthen the
economy of our country, and in the near future Azerbaijan will become
very strong economically. In 2005 and 2006, major oil and gas pipelines
will be in operation, which will help all the countries involved
to improve the living standards of their people.

Of course, that is only one part of life in our country today.
Azerbaijan is developing economically but also socially. We carry
out a lot of social programmes and although our economic policy
is based on free market principles, the largest part of our budget
structure is socially-oriented. That combination of market economy and
social protection is one of the key factors to our success.

In the field of political reform, the country has made important
achievements. Our presence for three years in the Council of Europe
has played a crucial role in enabling Azerbaijan to continue along
the path of democracy. New legislation has been adopted. The recommendations
of the Council of Europe and the commitments that our country undertook
on their adoption and their implementation helped our country a
great deal. I should therefore like to express my sincere gratitude
to all our colleagues in the Council of Europe for their constructive co-operation,
advice, expertise and recommendations, all of which were aimed at
the further democratisation of our society and at helping Azerbaijan
to become a full member of the European family. Much has still to
be implemented. In many areas, our life does not meet international
standards, for which there are objective and sometimes subjective
reasons. A country that has suffered war, occupation, civil war
and other very dramatic events cannot all of a sudden become fully
democratic and free, but that is none the less our strategic choice. Events
beginning with the presidential elections and the measures taken
by our government after those elections show our commitment to those
values and show our determination to continue to develop a free, democratic
and pluralistic society.

Economic growth and democratisation of society are key elements
of our policy, and one cannot exist without the other. You can be
economically strong, but if you do not have democracy and transparency
and if human rights are not protected, the country will never be
successful. We examined the experience of some oil-producing countries
and, unfortunately, we found out that not all of them were success
stories. Sometimes, oil brings not only prosperity, but negative
elements. Given all the bad experience behind us, we are very determined
not to make mistakes.

At the same time, the country has a lot of problems. We are
fighting against poverty. We are now implementing a poverty-reduction
programme, together with the World Bank. Given our unemployment,
one of the elements of our economic and social reform programme
involves the creation of hundreds of thousands of jobs, especially
in the regions. That was officially declared by me to ensure that
the country develops in a dynamic and diversified way, not only
in the capital and the main cities, but in all the regions of Azerbaijan.
Faraway villages must feel the benefit of our economic growth.

Only if the people feel that they are starting to have a better
standard of living will our government consider its policy implemented.
That is our goal – to provide equal conditions for all citizens,
so that everyone can benefit from economic prosperity and oil development
and that each citizen of Azerbaijan can enjoy the same rights. We
have made some good achievements in that respect. Ethnic and religious
tolerance represent some of our country’s main achievements. Not
only during our independence, but even before then, when we lived
in a soviet system and were part of the Soviet Union, religious
and ethnic tolerance were very common factors in Azerbaijan. That
policy continues. We are a multinational country. All the nations
and representatives of all the religions feel themselves at home
there.

One of the major problems that our country has been facing
for a long time is the continuing occupation of 20% of Azerbaijan’s
territory by Armenia. That aggression started with acts of aggressive
separatism, conducted by Armenia against Azerbaijan, and resulted
in the occupation of the Nagorno-Karabakh autonomous region and seven
other regions of Azerbaijan beyond the administrative borders of
the Nagorno-Karabakh autonomous region. Armenians have never lived
in those seven regions of Azerbaijan. They were exclusively inhabited
by Azerbaijanis, and that occupation led to hundreds of thousands
of refugees.

The facts are well known in the Assembly. Members of our delegation
have spoken many times about them and they are reflected in many
Council of Europe documents. Some 250 000 Azerbaijani refugees live
in Armenia today, and 700 000 Azerbaijanis who lived in those seven
regions of Azerbaijan became internally displaced persons. Also,
about 50 000 Azerbaijanis who lived in the Nagorno-Karabakh autonomous
region became refugees. We also have refugees who came to Azerbaijan
from other countries, and those people became refugees because of
other conflicts. That is perhaps the highest number of refugees
per capita in the world – 1 million out of 8 million – and that
situation has continued for more than ten years.

This will be the tenth anniversary of a cease-fire between
Armenia and Azerbaijan, and for ten years the negotiations have
produced no result. Of course, we cannot agree with that situation.
Azerbaijan will never agree to the loss of the territories. International
law norms must prevail. Azerbaijan respects the territorial integrity
of all the countries in the world and demands that the same attitude
be taken towards itself. Our territorial integrity must be restored.
The Armenian occupation forces must be pulled out of the occupied territories,
and refugees must be given a chance to return to their homeland.

In the twenty-first century, we cannot agree with a situation
where one country of the Council of Europe – Armenia – continues
to occupy the territory of another country of the Council of Europe
– Azerbaijan. The international community cannot agree to that situation.
Of course, we hope that the joint activity of the international
community will help us to resolve this problem. We are very grateful
to the Council of Europe for starting to discuss this issue. As
you know, the Political Affairs Committee is now working on a report
on Armenia, Azerbaijan and the Nagorno-Karabakh conflict. We expect
that that report will reflect the situation and, more importantly,
that it will give a political appraisal of the conflict.

Armenians have their own arguments, and I would like to comment
briefly on them in order to present the whole picture, not just
one side of it. Their argument is that Armenians who live in Nagorno-Karabakh
have a right to self-determination. Such rights are very important
and we all respect them. However, I would like to draw your attention
to one important issue. Armenians already have self-determination.
They have an Armenian state, so Armenians as a nation have already
executed their right to do that. Imagine what would happen if they
started to have self-determination wherever they lived. Would that
mean that, wherever there is a minority, there should be separatism?
Does that mean that, wherever there is a minority, it is entitled
to create an independent state? Of course not.

There are minorities in many countries, including European
countries. We and the Azerbaijanis have minorities in many countries.
There are almost 500 000 Azerbaijanis in Georgia. There are also
a lot of Azerbaijanis in Russia and in other countries. There are
200 000 Armenians in Georgia. That is four times more than the number
of Armenians in Nagorno-Karabakh now. Does that mean they must have
selfdetermination there? The principle does not work in that concrete
case. Therefore, there is a contradiction between self-determination and
territorial integrity in this case. In other words, we expect the
international community to play a very active role in finding a
resolution to that conflict, based on the norms of international
law.

Dear ladies and gentlemen, as I said, it is a great pleasure
and honour for me to be here and to address you. Azerbaijan has
made important achievements since gaining independence. Today, our
strategic choice towards integration into Europe and into the European
family – European structures – is continuing. We are strongly committed
to that policy. We will do our best to ensure that Azerbaijan will
meet all the standards and all the criteria that are common in the
Council of Europe and in other European countries. That is our policy, which
we have been conducting for a long time. What is happening today
in Azerbaijan is a continuation of that policy. We shall continue
to be active members of the Council of Europe. We are strongly committed
to European values, which we share. Our delegation has always been
active in the Council of Europe.

I thank members of the Council of Europe for their understanding
of our problems. We have found good friends here. I, personally,
have made very good friends. I am pleased to see my former colleagues
in the European Democratic Group, with whom I worked constructively
for three years, and all the Assembly members. I genuinely miss
the days when I was a member of the Parliamentary Assembly and worked
with you. Today, I have another position and another responsibility.
I assure you that the policy that we have been following in Azerbaijan
for the past few years will continue and bring peace and prosperity
to our country and our region. Thank you very much for your attention.

Thank you
very much, Mr Aliyev, for your most interesting address and for
the kind words you found for our Assembly and the Council of Europe.
As you know, members of the Assembly have expressed a wish to put
questions to you.

I remind members that questions must be limited to thirty
seconds and no more. Colleagues should ask questions and not make
speeches. I will allow supplementary questions only at the end and
only if time permits. The first question is from Mr Gaburro.

Mr GABURRO (Italy) (translation)

Allow me first
to congratulate the President of Azerbaijan on the significant progress made
in recent years. My question relates to the economy, where progress
has been considerable. Can you give us some idea of the scale of
the economic relations existing between Azerbaijan and the economies
of the countries of the European Union? What are the tendencies,
and what are the main sectors concerned, in terms of both imports
and exports? Thank you.

Mr Aliyev, President of Azerbaijan

Our trade and economic relations with the European Union are growing
every year. If we compare the data for 2003 with those for 2002,
we can see that growth was almost 40%. This shows that Europe has
become an important market for Azerbaijan. I should like to mention
that Italy is our biggest trade partner.

Of course, it is also clear that much of our infrastructure
in Azerbaijan was created when our country was part of the Soviet
Union. The market for our products is mainly the neighbouring countries
of the former Soviet Union. New facilities and enterprises fulfil
international standards but there are not many. Most of our industry is
from the past and the major consumers of our goods are therefore
the neighbouring countries of the former Soviet Union.

However, the tendency is positive and we look towards European
markets with great hope and aspiration. I am sure that dynamic trade
relations will grow this year, too.

Ms DURRIEU (France) (translation)

It is a pleasure
and an honour to have you here, Mr President. You have just declared
your determination to make your country a democracy. What steps
have you taken, therefore, to counter the violence and irregularities
that vitiated the recent presidential elections?

Your country is being monitored. What progress have you made
in honouring your commitments in this respect?

Mr Aliyev, President of Azerbaijan

Events after the presidential elections show that hostility continues
to exist in our society. The government and our party support political
dialogue – normal, constructive dialogue between all the political
forces in our society. We want to resolve our problems around the
table, but, unfortunately, some members of the opposition, even
before the official results of the election were declared, preferred
to express their views with stones and metal bars. A severe attack
on the police was broadcast on television. There were many episodes
of violence and all the major television channels broadcast one
of them, during which demonstrators drove a big truck at the police.

Of course, Azerbaijan, like any other country in the world,
has a right to defend itself. Brutal attacks on the police are not
appreciated in any country. I believe that all the political forces
in our country must behave within the framework of the law. Democracy
and law must go together. On many occasions, before and after the elections,
I invited, in my official speeches, all the political forces of
Azerbaijan to participate in constructive dialogue. Unfortunately,
I have not received a response. Nevertheless, we shall continue
to try to create an environment in Azerbaijan in which all political
disputes are resolved around the negotiating table.

Mr SLUTSKY (Russian Federation) (interpretation)

asked
what progress had been made with regard to Azerbaijan’s actions against
poverty and human suffering, and highlighted the 1 million displaced
persons who were affected in Nagorno-Karabakh.

Mr Aliyev, President of Azerbaijan (interpretation)

said that his government was working hard with international institutions
such as the World Bank to achieve its aim of the eradication of
poverty. He believed that the prospects for success were good. Refugees
were the most vulnerable sector of society and were therefore a priority.
Azerbaijan had only limited resources but was working to help refugees
in areas which had been freed from occupation. Houses, schools,
hospitals and even entire villages had been constructed. However,
a lot of Azerbaijani territory was under Armenian occupation. Armenian
forces must withdraw from his country.

He stressed that a resolution of this humanitarian catastrophe
was needed. For more than ten years now, because of the Armenian
occupation, large numbers of displaced people had been living in
tent camps. The Armenian forces were occupying territory that did
not belong to them. Mr Aliyev saw some signs that people in Armenia
had started to understand that. Armenia had to withdraw its forces
and needed to do so quickly.

Ms VERMOT-MANGOLD (Switzerland) (translation)

Mr President,
you spoke several times about solving problems at the negotiating
table. Do you see a possibility of submitting a peace plan between
Armenia and Azerbaijan? When will this happen and what will be the
cornerstones of this plan?

Mr Aliyev, President of Azerbaijan

We are committed to resolving the issue by peaceful means,
and Azerbaijan has openly declared its policy several times. Of
course, in such issues not just one side is involved – both sides
must come to an agreement. We expect those assigned to help us to
resolve the issue – the OSCE Minsk Group, and its co-chairs from
the United States, France and Russia – will play a more active role
in the resolution of the conflict. When two sides cannot agree,
a third party is entitled to help. The Minsk Group co-chairs have
a mandate to help and mediate in the negotiations, not merely to
observe, as unfortunately happens sometimes. We are committed to
the continuation of negotiations but, at the same time, they can
be held only if there is a subject to negotiate. If there is no
subject, we are not in favour of creating an imitation of negotiations.
If Azerbaijan thinks that the continuation of negotiations is pointless,
we will look at our policy again.

Mr GROSS (Switzerland)

I congratulate
you, Mr President, on your courage in speaking freely here. As we often
struggle with concrete issues, I would like to ask you an open question.
When you have to establish priorities and choose between economic
roles, democratic development and social justice, what do you do
and how do you link the three together?

Mr Aliyev, President of Azerbaijan

Thank you for your question. Implementation of those goals
can be achieved only through a package. One can have an economically
strong country without democracy but not vice versa. One cannot
create a democratic country without a strong economy, which is needed
to resolve social problems. In poor countries, people mostly think
about how to overcome poverty rather than about how to create a
more democratic society. None of those aims can therefore be a priority
in isolation as they are all important to us. Without economic backing,
however, it is not possible to create a democratic society. Azerbaijan
has started to build economic foundations and attract investment.
It has started to diversify its economy, and the figures that I
mentioned show that the economy is developing. Taking into account
the fact that every eighth person in the country is a refugee and
has to be paid for by the government, our priorities are social
stability, security, democracy and economic development, as our
policy demonstrates.

Mr KIRILOV (Bulgaria)

As a former
member of the Assembly, Mr President, it will not be news to you
that many delegates are very concerned about the number of unresolved
conflicts in the Southern Caucasus. You have spoken about the conflict
affecting your country, but I would like to know your attitude to
the confidence-building measures of the international community
that are designed to create a climate of trust. Do you appreciate
and support those initiatives?

Mr Aliyev, President of Azerbaijan

Without confidence-building measures, it would be difficult
to move towards general agreement. We cannot agree about every item
in the peace resolution, and must take a step-by-step approach.
Confidence-building measures have a broad meaning, but their main
aim is to resolve the conflict step by step. That approach is logical
and can help both sides steadily to come to an agreement. The first
step is for Armenian occupational forces to leave the seven regions
of Azerbaijan beyond the administrative border of the Nagorno-Karabakh
autonomous region, as that will contribute towards a solution. That
was discussed in the European Parliament and other circles and it
is a good confidence-building measure, which will help us to achieve
a resolution.

Mr ATES¸ (Turkey)

I would like to
welcome you, Mr President, in our mother tongue, Turkish. If we
had an interpreter we could converse in Turkish.

You mentioned oil and gas pipelines and the importance of
the prosperity that that project will bring to people in the region.
How do you see the link between the successful implementation of
the aforementioned projects and the future integration of peoples
in the regions, especially in the context of the recent initiatives
on the part of the European Union and the wider Europe?

Mr Aliyev, President of Azerbaijan

The implementation of the projects will have an impact on
our relations with the European Union in various ways. First, it
will create a very strong economy in Azerbaijan. It is naïve to
think that only oil will help us to achieve prosperity. We have
to work hard and use this unique opportunity to create a strong
economy that will not depend on oil and oil prices. That is our
strategic goal. Of course, creating a strong economy will come close
to European standards and will play an important role in our international
relations.

Beginning in 2006, Azerbaijan will start to deliver natural
gas to Turkey. The Assembly knows that Turkey and Greece have agreed
to unify their gas distribution networks. There is therefore the
possibility of us delivering gas to Turkey and Greece and to other
European countries as well. If that happens – this is another part
of our strategic agenda – Azerbaijan will be a reliable and efficient
supplier of gas to European consumers, taking into account transportation
costs and other factors. Those are the most visible factors that
we can identify as we strive to achieve our goals, but many other
factors will become relevant.

Let me give the Assembly one figure. Some US$10 million is
invested in four oil and gas projects in Azerbaijan every day. The
international financial organisations which give loans to implement
such projects obviously believe in us, and that has increased not
only our credibility but the possibility of us working with such organisations,
including the World Bank, in different sectors. I am sure that that
will happen and, as a result, our relations with the European Union
will take on a different dimension. The development of a non-oil
sector and our transportation and integration projects will continue
after the major energy projects are implemented.

Ms HURSKAINEN (Finland)

Reports on the
Azerbaijani electoral process allege electoral rigging in polling stations.
Were the complaints investigated, and was any action taken?

Mr Aliyev, President of Azerbaijan

Last year’s elections reflect the real situation in the country.
Of course, there were several irregularities. Our legislation is
not perfect and, to be frank, we are not ready to hold elections
that meet the standard required by the European Union. However,
there is no doubt that the results of the election reflect the real
story. Before the election, several public opinion polls were held
in Azerbaijan, some by international organisations. The American
International Republican Institute conducted polls before the campaign
started. It showed that more than 65% of the voters were planning
to vote for me. The electoral campaign gave me another opportunity
to present my programme, views and ideas. There were also other factors.
The opposition could not agree on a single candidate and its members
fought with each other instead of fighting the ruling party candidate.
That added votes to those cast for me.

There is no doubt, either within Azerbaijan or outside it,
that the results reflect the reality. At the same time, the matter
has been raised with those polling stations where there were irregularities.
If I am not mistaken, the election results in more than 600 polling
stations were cancelled because of irregularities. All the necessary steps
have been taken and the process to improve things will continue.
The next elections will be better. The recent elections improved
on the systems employed in the previous election. Azerbaijan is
a new country and it has not yet met all the necessary standards.
Some 1 000 observers were in Azerbaijan for the election. I am sure
that there will be fewer problems in future.

THE PRESIDENT

We should
end, but we are one question away from the first question to be
asked by an Armenian. It is fair that at least one Armenian has
the chance to put a question. I suggest that President Aliyev responds
once both questions have been asked. I call Mr Bruce.

Mr BRUCE (United Kingdom)

As rapporteur
on political prisoners in Azerbaijan, I appreciate your courtesy, Mr Aliyev,
in receiving me in December and for meeting me yesterday, when we
had a constructive dialogue. I am aware that prisoners have been
released in two tranches since we met in December. Do you think
you can meet the obligation to complete the process in September
and therefore close the book on the relationship between the Council
of Europe and Azerbaijan, so that we can move towards your aim of
building a pluralistic democracy?

Mr RUSTAMYAN (Armenia) (translation)

In signing up
to various treaties or international co-operation programmes, Azerbaijan
regularly enters unilateral reservations designed to prevent Armenia
from participating in any kind of regional or international co-operation.

As the newly-elected president, do you intend to continue
this policy? If so, do you not think that the lack of any kind of
co-operation bringing together all countries of the region is likely
to affect its overall development? Do you not think that we are
missing out on an opportunity to reduce tension and create the kind
of conditions that would be conducive to settling the conflict?

Mr Aliyev, President of Azerbaijan

First, I shall answer Mr Bruce’s question. We are committed
to implementing all the obligations that Azerbaijan has undertaken
since we have participated in the Assembly. I am personally committed
to closing that chapter because we have other things to do. We must
develop our country and create a modern, democratic and free society.
The elements of the past must remain as history. Several times,
that position was declared, and I am sure that if everyone across
the political spectrum throughout Azerbaijan would join in those
efforts to create, rather than to destroy or ruin, we would achieve
our goals earlier.

Our problem in the past was that some forces in Azerbaijan
were acting against the government, against our state and against
our independence. They were committing crimes against the sovereignty
of Azerbaijan – criminal acts as well as other types of action.
We cannot afford that. We are a country that has a lot of problems. We
have occupation, we have refugees, so we must consolidate. All Azerbaijanis
must unite around the idea of strengthening our independence, putting
an end to the conflict between Armenia and Azerbaijan, and freeing our
land.

When I was elected, in my first speech after my inauguration
I said that I would be the president of all Azerbaijanis – and that
is what I am doing. The policy of putting an end to the dramatic
events of the past will continue, but it is very difficult to do
that alone. All political forces must take an active part in doing
that. The steps that I have taken in pardoning prisoners show that
intention and that policy, and I think that those will continue.

In answer to the second question from Mr Rustamyan, I would
like to clarify an important issue – an issue that I spoke about
a couple of times when I was a member of the Parliamentary Assembly
of the Council of Europe. Sometimes there is an erroneous perception
that Armenia wants to co-operate with Azerbaijan, but Azerbaijan does
not want that. That may be true, but there are good reasons for
it. Azerbaijan’s territory is occupied, and of course we cannot
co-operate with the country that perpetrated that occupation. Imagine
how you would feel if your country were suffering from occupation
and those who were occupying it said, “Come on, let’s start co-operating
now.” That will not work: it is not a serious suggestion. Azerbaijan
will never co-operate with Armenia until the conflict between the
two countries over Nagorno-Karabakh is resolved. If Armenia wants
to co-operate in the region, it is free to do so. We shall conduct
our own policy. However, without Azerbaijan’s participation, regional
co-operation is not possible.

What did Armenia gain from the occupation? Did the Armenian
people start to live better? Did Armenia become economically and
politically stronger? Did its image in the world improve? Let the
Armenian people answer all those questions for themselves. Keeping
territories that belong to other countries does not help to create
a positive image for a country. Regional co-operation with Armenia
is not possible. Again, I stress that that is the official policy
of our country until Armenian forces are pulled out of the territory
of Azerbaijan.

THE PRESIDENT

I thank
you most warmly, President Aliyev, on behalf of the Assembly, for
visiting the Council of Europe, for your address, and for your answers
to our questions. We wish all the best to you and to your country.